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The Age | Landlords' Market
5 March 2010
It's a landlord market in a climate of strong population growth and low vacancy rates...
Experts are waging battle over just how low Melbourne's residential vacancy rate is right now, but no matter who is right it's basically good times for landlords and property investors - and tough times for renters. The Real Estate Institute of Victoria says a survey of its members shows that rental vacancies two months ago were about one percent - but property researcher SQM says its figures show Melbourne's vacancy rate is 3.9 percent.
Either way, the overwhelming majority of Melbourne rental properties are already full, the housing shortage continues with little sign of abating, and investors are pretty well guaranteed of finding tenants.
One tiny ray of hope for renters comes from REIV boss Enzo Raimondo, who says that despite a painfully tight market, low interest rates and slower price growth "should make conditions easier for renters who are contemplating buying a home".
The rental squeeze seems to be even tighter in the country, with an REIV report in November last year showing that for the fourth month in a row there were fewer available rental homes in regional Victoria than in metropolitan Melbourne.
The investment prospects for apartments also look strong, with leading industry forecaster BIS Shrapnel predicting that rental growth in the inner Melbourne apartment market will continue to strenghten during the next few years.
BIS Shrapnel senior project manager Angie Zigomanis says a combination of strong tenant demand and declining rental supply will maintain pressure on vacancy rates in the apartment market and he predicts a total rental growth of 32 percent over the next five years - an average of just under six percent per annum.
According to Matthew Bell, the economist for Australian Property Monitors, an improving employment outlook means renters will be more likely to agree to higher rents to secure the desired property compared with the past one or two years.
Countering Mr Raimondo's ray of hope for tenants, Mr Bell says the first-home owners' grant ending last year along with strong house price growth has made the move from renting to owning a less attractive proposition this year than last.
In an era of an undersupply of new properties, strong population growth and low vacancy rates, the prospects for landlords and residential property investors continue to look extremely healthy.
So healty in fact, some property and finance services are offering investors a guarantee that tenants will pay rent at market prices on their purchase for the next ten years, and if the peropty stays vacant, the company will pay the rent instead. The Age | Saturday 13th February 2010 | John MacPherson | View pdf article > |
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